South African Football Association

ANNUAL FINANCIAL REPORT incorporating GROUP ANNUAL FINANCIAL STATEMENTS and ASSOCIATION ANNUAL FINANCIAL STATEMENTS for the year ended 30 June 2020

FOR COSAFA CHAMPIONS 2017, 2018, 2019, and 2020!

COME SHOW YOUR L VE

Annual Financial Report for the year ended 30 June 2020

Administration Reports:

Chief Executive Officer 7

Chief Financial Officer 9

Charts & Graphs 10 – 11

National Executive Committee’s Responsibility Statement12

National Executive Committee’s Statement on Corporate Governance 13

Composition of the National Executive Committee 14

Report of the National Executive Committee 15 – 18

Independent Auditor’s Report19 – 23

Statement of Profit or Loss and Other Comprehensive Income 24

Statement of Financial Position 25

Statement of Changes in Equity 26

Statement of Cash Flows 27 CONTENTS

Summary of Significant Accounting Policies 28 – 36

Notes to the Group and Association Financial Statements 39 – 62

The following supplementary information does not form part of the Group Financial Statements and Association Financial Statements and is unaudited:

Detailed Income Statement 63

Banyana Banyana won the 2020 COSAFA Championship for the fourth year in a row having won their group matches without conceding a goal. They beat Angola 2-0, eSwatini 5-0 and Comoros 7-0 to reach the semis. They then beat Malawi 6-2 in the penultimate match before edging Botswana 2-1 in the final. Coach Desiree Ellis did not bring any of the overseas stars due to Covid-19 but instead assembled a locally-based squad that comprised five members of the Under 20 team. Sibulele Holweni finished as the Top Goalscorer while Hildah Magaia was awarded the Player of the Tournament accolade. This 2020 COSAFA tournament commenced on 3 November 2020 making it the first football tournament to be staged in the African continent since the coronavirus outbreak. 3 FOR MEN’S REGIONAL LEAGUE

COME SHOW YOUR L VE The goals of the South African Football Association leadership have been defined and mapped out in a plan called Vision 2022.

Vision 2022 is a fundamental rebuilding of the structures of SAFA at all levels to create the conditions that will bring about the sustained international success of our National Teams.

We have set our sights on a long-term development plan to achieve the goal of always being in the top 3 of the African rankings, and in the top 20 of the World rankings.

10% of the South African population must play football. Therefore, we need to redouble our efforts to:

Launch a vibrant schools’ football programme which includes girls; Strengthen women’s football significantly.

VISION 2022 IN A NUTSHELL: Technical Performance Financial Stability Commercial Viability Sound Governance World-Class Administration Major Player in World Football

Positive Image STATEMENT VISION 2022 Gender Equality

Gauteng Province were crowned the 2019 SAFA / SAB League U21 National Champions after beating Western Cape 2-1 in the ﬁnal which took place at North West University in Mahikeng on 03 August 2019. Bongani Maseko (Gauteng) was named Coach of the Tournament, Thabang Tsotetsi (Western Cape) was named Player of the Tournament, Siyabonga Mthombeni from Mpumalanga was named Top Goalscorer of the Tournament and Goalkeeper of the Tournament was Bongani Guguleni from Mpumalanga. Referee of the Tournament was Nkosi Joseph from North West. The 2020 Men’s Re- gional Leagues were not played to ﬁnish due to the Covid-19 pandemic and therefore the Provincial and National Play-offs could not take place. 5

Administration Reports

Advocate Tebogo Motlanthe

Chief Executive Officer

In the 2018/2019 financial year we reported a loss of R75.9 million and building on our cost cutting measures we have managed to turn things around. We continued from the previous year by doing things differently and by reducing the operational costs and as such, continued to benefit the Association greatly during this financial year. We further had to deal with the challenges brought by the COVID-19 pandemic which caused all football activities to be halted for a time.

The SAFA Members have contributed hugely to the turnaround on the finances and we are grateful for their gesture and we thank them for continuing to put the interests of the Association first. Their selfless attitude has greatly assisted the recovery plan.

Recognizing that the operations were impacted by the pandemic, we took a decision to introduce a leaner organogram and to take more tasks to our Members. We believe that this will not only be a cost saving exercise, but it will also go a long way in empowering our Members and directing the resources to where they are needed most. We continue to work on making the National Technical Centre operations efﬁcient to ensure that we maximise the proﬁts.

Our National Teams’ expenditure was much less than the prior year’s. This reduction was due to the COVID-19 related national lockdown which resulted in the suspension of all football activities. Irrespective of the suspension of international football in March 2020, the prior year was congested with a number of international tournaments which included the CAF Africa Cup of Nations Egypt 2019, the Cyprus Women’s Cup and the FIFA Women’s World Cup France 2019™.

During the ﬁnancial year under review, we launched the inaugural season of the SAFA National Women’s League. This League constituted 12 teams and it was successfully completed. Mamelodi Sundowns Ladies FC were the winners of the inaugural National Women’s League and will campaign in qualiﬁers to advance to the CAF Women’s Champions League which is a new continental competition scheduled for 2021.

As a result of engagements with potential new partners, we have managed to secure a sponsorship for match ofﬁcials and, in this regard, we are grateful to Showmax (MultiChoice) for having come on board. We continue to engage other potential sponsors and with the guidance of the President, Dr Jordaan, we are very hopeful that we will secure new revenues and continue to improve our ﬁnancial position.

We need to show our appreciation and offer great thanks to all of our Sponsors, Suppliers and Partners for their continued support, especially during these difﬁcult times. Their support to this game of billions is highly appreciated.

We thank Dr Jordaan as the President for his leadership and guidance; the NEC and various committees for their continued support and efforts which have contributed to the turnaround strategy. It is through the tireless work and guidance of the collective that we have managed to report a surplus this ﬁnancial year.

2019 – 2020 Annual Financial Report 7 flysaa.com JHB 211453

FLYING OUR BOYS TO GREATER HEIGHTS. SAA, official airline partner of Bafana Bafana. Mr Gronie Hluyo

Chief Financial Officer

We are reporting a profit of R54.4 million for the financial year ended 30 June 2020. This is a significant turnaround of R130.3 million (Group). Therefore, the financial performance of the Association and Group was excellent despite some global challenges that befell us from March 2020 and these were due to the COVID-19 pandemic.

During March 2020, the State President announced a national lockdown due to the COVID-19 pandemic. This, amongst other measures, included the suspension of all football activities in the country. The suspension of football activities posed a major challenge with some of our sponsors. The nature of our sponsorship relationships is that we must deliver football activities in return for funding. Consequently, some sponsors reduced their funding.

However, our ﬁnancial turnaround was achieved mainly due to the following:

• As a result of the national lockdown, our activities for the year were reduced. This resulted in a reduction in activities costs. All our National Teams’ costs reduced drastically and these included:

– Men’s Senior National Team which participated at the Africa Cup of Nations in the prior ﬁnancial year. – Women’s Senior National Team which participated at the 2018 Africa Women’s Cup of Nations Ghana, 2019 Cyprus Cup and FIFA World Cup Women’s France 2019™.

All our competitions, which included league matches and national playoffs and championships, were also suspended in March 2020; therefore, the competition costs were also reduced.

• Restructuring of the balance sheet involved reviewing all our liabilities and ensuring that we only retain those that will result in future cash ﬂow outﬂows. This exercise resulted in the writing off of, among others, Regional Grants.

• Massive ﬁnancial support that we received from FIFA and CAF in the form of COVID-19 Relief Grants.

During the year under review we also managed to reduce the net current liabilities ratio. In the prior year the current liabilities exceeded current assets by R171.2 million. However, we have managed to reduce this to R95.8 million. We are continuously working on improving this ratio so that our cash ﬂow situation can also improve.

The challenges posed by COVID-19 will continue to be a threat on our revenue streams for the forthcoming ﬁnancial year. We are, however, working on a number of mitigating strategies for us to minimise the adverse impact on our ﬁnancial position.

I will conclude by thanking the Finance & Procurement Committee and the Audit & Risk Committee for their continued guidance.

2019 – 2020 Annual Financial Report 9 Charts & Graphs

ASSETS

Non Current Assets 110 Current Assets 44

LIABILITIES AND RESERVES

Non Current Liabilities 14 Current Liabilities 140 Reserves 0

ASSETS

Non Current Assets 110 Current Assets 43

LIABILITIES AND RESERVES

Non Current Liabilities 14 Current Liabilities 138 Reserves 1

REVENUE 2020

Grants Received 61 Host Cities 4 Sponsorships 171 National Technical Centre 4 Other Income 2

EXPENSES 2020

Other Admin Expenditure 93 National Teams 57 Football Development –2 National Technical Centre 3 Competitions & Leagues 26 Governance 11

PROFIT 54

REVENUE 2020

Grants Received 61 Host Cities 4 Sponsorships 171 National Technical Centre 4 Other Income 2

EXPENSES 2020

Other Admin Expenditure 93 National Teams 57 Football Development –2 National Technical Centre 3 Competitions & Leagues 26 Governance 11

PROFIT 54

10 South African Football Association SAFA Income Statement – Revenue (ZAR Million)

2016: 287 2017: 341 2018: 293 2019: 242 2020: 242

SAFA Income Statement – Expenses (ZAR Million)

2016: 332 2017: 318 2018: 311 2019: 316 2020: 188

SAFA Income Statement – Result (ZAR Million)

2016: - 45 2017: 23 2018: - 18 2019: - 74 2020: 54

SAFA Income Statement – Reserves (ZAR Million)

2016: 6 2017: 30 2018: 12 2019: - 62 2020: 1

2019 – 2020 Annual Financial Report 11 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

National Executive Committee’s Responsibility Statement

The National Executive Committee (“NEC”) is responsible for the preparation and fair presentation of the Group Financial Statements and Association Financial Statements of South African Football Association (the “Association”), comprising the statements of financial position at 30 June 2020, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes in accordance with International Financial Reporting Standards. In addition the NEC is responsible for preparing the report of the NEC, statement on corporate governance and composition of the NEC.

The NEC is also responsible for such internal controls to enable the preparation of ﬁnancial statements that are free from material misstatement, whether due to fraud or error, and for maintaining adequate accounting records and an effective system of risk management.

The NEC has made an assessment of the Association’s ability to continue as a going concern and for the reasons stated in the report of the NEC believe that the Association will be a going concern in the year ahead.

The NEC believes that the Group has, or has access to, adequate financial resources to continue in operation for the foreseeable future and accordingly the annual financial statements have been prepared on a going concern basis (refer to note 26). The NEC has satisfied itself that the Group is in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable requirements. The NEC is not aware of any new material changes that may adversely impact the Group. The NEC is also not aware of any material non-compliance with statutory or regulatory requirements or of any pending changes to legislation which may affect the Group.

The auditor is responsible for reporting on whether the Group Financial Statements and Association Financial Statements of the South African Football Association are fairly presented in accordance with the applicable ﬁnancial reporting framework.

Approval of the Group Annual Financial Statements and Association Financial Statements

The Group Financial Statements and Association Financial Statements, as set out on pages 24 to 63, were approved by the NEC on 16 December 2020 and are signed on its behalf by:

Dr Danny A. Jordaan

President

Adv Tebogo Motlanthe Chief Executive Ofﬁcer

12 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

National Exective Committee’s Statement on Corporate Governance

The NEC supports the principles incorporated in the Code of Corporate Practices and Conduct as set out in King Code of Corporate Practices and Conduct. By supporting the Code, the NEC has recognised the need to conduct the Association with integrity and to issue ﬁnancial statements which comply with International Financial Reporting Standards.

Group Financial Statements and Association Financial Statements

The members of the NEC are responsible for preparing the Group Financial Statements and Association Financial Statements in a manner which fairly presents the state of affairs and results of the operations of the Group and the Association. The financial statements are prepared in accordance with International Financial Reporting Standards. The significant accounting policies adopted in the preparation of these Group Financial Statements and Association Financial Statements are set out in the accounting policies in the financial statements.

The NEC is also responsible for the assessment of the Association’s and its subsidiaries’ ability to continue as a going concern.

The auditor’s responsibility is to express an opinion on these ﬁnancial statements based on an audit conducted in accordance with International Standards on Auditing.

Internal controls

The members of the NEC are responsible for maintaining adequate accounting records and for taking reasonable steps to safeguard the assets of the Association and its subsidiaries to prevent and detect fraud and other irregularities. The internal controls implemented operated effectively throughout the year.

Audit and Risk Committee

The committee members are appointed by the NEC.

The committee has met regularly over the past year to discuss accounting, auditing, internal controls and risk related matters. The committee provides a forum through which the independent auditor reports to the NEC.

Finance and Procurement Committee

The committee members are appointed by the NEC.

The committee has met regularly over the past year to discuss accounting, budgeting and other ﬁnancially related matters.

2019 – 2020 Annual Financial Report 13 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Composition of the National Executive Committee

At the date of this report the composition of the NEC was as follows:

President Members Danny Jordaan Andile Ngconjana Anastasia Tsichlas Vice Presidents Aubrey Baartman Irvin Khoza Bennett Bailey Ria Ledwaba David Bantu Thamsanqa Gay Mokoena David Molwantwa (until 20 June 2020; thereafter an ordinary NEC member) Emma Hendricks Xolile Nkompela Gerald Don Gladwyn White Chief Excecutive Officer Jack Maluleka Tebogo Motlanthe Jose Ferreira (Chief Executive Officer from 7 May 2020) Kaizer Motaung Thamsanqa Gay Mokoena Kwenzakwakhe Ngwenya (Acting Chief Executive Officer from 1 November 2019 Letima Mogorosi until 15 April 2020) Linda Zwane Russell Paul Litheko Marago (Acting Chief Executive Officer from 1 October 2018 Mato Madlala until 31 October 2019) Mbongeni Shibe Monde Montshiwa Honorary Presidents Mxolisi Sibam Lesole Gadinabokao Mzimkhulu Fina Molefi Oliphant Paseka Nkone Pius Nqandela Honorary Members Poobalan Govindasamy Jeremiah Mdlalose Shuping Seboko Motebang Mosese Simphiwe Xaba Obakeng Molatedi Tankiso Modipa Thabile Msomi Vincent Ramphago William Mooka

The above members, save for the position of the Chief Executive Ofﬁcer, Honorary Presidents, Honorary Members and National Soccer League Representatives, were elected onto the NEC on 26 May 2018. In terms of paragraph 32.3 of the Association’s Statutes, these members will hold ofﬁce for a period of four years.

14 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Report of the National Executive Committee

1. Nature of business

The South African Football Association (“the Association”) is the governing body for football in South Africa. Its main aim and objectives are to promote, advance, administer, co-ordinate and generally encourage the game of football in South Africa in accordance with the principles as laid down in the statutes of the Fédération Internationale de Football Association (“FIFA”). There was no major change in the nature of the business of the Association during the year. The Association has subsidiaries which collectively are referred to as the Group.

2. Financial results

The Group’s results, comprising the Association and its subsidiaries, are contained in the attached financial statements. The Group made a profit of R54.4 million (2019: R75.9 million loss). The Group’s financial position reflects accumulated losses of R0.2 million (2019: R63.5 million accumulated losses). The Group’s financial performance for the period was excellent. This as a significant turnaround from the prior year performance. The turnaround is mainly attributed to: • The restructuring of the balance sheet, which included the reassessment of amounts owed to SAFA Regions based on the compliance requirements, negotiation of a final settlement agreement with Siyaya TV (Pty) Ltd and a detailed and meticulous review of accruals • The reduction in football activities costs due to the national lockdown which resulted in the suspension of all football activities for approximately 3½ months during the year under review • The continuous financial support received from FIFA through subventions

3. Going concern

The Group and Association made proﬁts of R54.4 million (2019: R75.9 million loss) and R63.4 million (2019: R74.2 million loss) respectively during the year ended 30 June 2020 and, as of that date, the Group's liabilities exceed assets by R0.2 million (2019: R63.5 million liabilities exceed assets) and the Association’s assets exceed liabilities by R0.8 million (2019: R62.6 million liabilities exceed assets) respectively. The Group continues to pursue its plans of improving this position and is still determined to achieve a net current asset position within the next few years. It is quite important for this position to be achieved because it would result in the debts being settled quicker. The Group has, therefore, set to intensify its ﬁnancial recovery plans which should improve its net current asset position.

The Group has long-term sponsorship contracts with most of its sponsors and this assures it of future revenue inflows. These sponsorships are expected to continue in view of the long-term nature and the mutual relationships that are long standing. The Group is also guaranteed of grant funding from FIFA, the Confederation of African Football (“CAF”). The Group also continues to exploit a number of revenue opportunities that it identified previously. This is being combined with the implementation of its financial recovery plan which has started to achieve a fair amount of success.

In October 2019 the Association concluded a new broadcast deal with the South African Broadcasting Corporation (“SABC”). Even though the new deal is significantly less than the previous one that terminated in April 2018, the broadcasting of our activities presents a platform for the Association to attract new sponsors. The Association is also working closely with the SABC in jointly realising maximum commercial benefits from the current contract. These include the value-in-kind benefits which are contained in the contract. The Association is now focusing and intensifying its efforts in acquiring a satellite broadcast partner. The Association is also exploring the myriad of opportunities presented by the Fourth Industrial Revolution era. These include the exploitation of streaming opportunities and use of other disruptive technologies for commercial gain.

The Association continues to negotiate with a number of potential sponsors for the sale of rights for a number of its properties. These properties include junior national teams, coaching education and leagues. The Association is making some steady progress in that regard despite the current tough South African economic conditions.

During the year under review, the Association signed a long-term partnership agreement with Le Coq Sportif South Africa (“LCS”). LCS is now the ofﬁcial technical sponsor of the South African Football Association and they will provide the Association with its kit requirements. Royalties fees will also accrue to the Association from this agreement and these will be based on revenue generated through the sales of replica jerseys and co-branded products.

Post year-end, the Association concluded a sponsorship deal with MultiChoice (Pty) Ltd. MultiChoice, through its subsidiary, Showmax, will sponsor the SAFA referees over a period of 5 (ﬁve) years. In addition to funding the referees’ programmes, MultiChoice will also provide SAFA referees with kit and apparel. 2019 – 2020 Annual Financial Report 15 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Report of the National Executive Committee

The Association is now at advanced stages of constructing a merchandise shop at SAFA House. This project is funded through the FIFA Forward programme. The shop is expected to contribute additional and unencumbered revenue to the Association and this will be achieved through the selling of a wide range of its merchandise within the shop and through online sales.

The Association's Ima Nathi sponsorship programme has not achieved its planned success. However, the Association continues to put effort into it because its success will give the Local Football Associations (“LFAs”) a huge financial boost and make the SAFA Regions less reliant on the national office for funding. Currently 3 (three) LFAs are beneficiaries of this programme and work is currently under way to bring more LFAs on board.

The FIFA Forward programme is still in place and the Association will continue to beneﬁt from it as a FIFA Member Association. The current funding cycle, which was approved by the FIFA Council, runs from 2019 to 2022. The Association, therefore, is guaranteed this funding for, at least, the next 2 years and FIFA has indicated that the funding will continue in future years. The total funding for Operational Costs and Projects is USD 6 million for the 4 years. These funds go a long way in covering the Association’s normal operational costs and some projects costs as well. In addition, FIFA recently introduced funding for women’s football. The ﬁrst allocation, which was USD 500,000.00, was paid to all Members Associations around September 2020. This funding from FIFA for women’s football will go a long way in assisting the Association.

The CAF grant funding is also still in place and each CAF Member Association receives USD 200,000.00 per year. This grant will continue to be paid by CAF, thus assuring the Association of future funding. The improved TV rights revenue for the 2022 and 2026 FIFA World Cup African Qualifiers are being finalised by FIFA. We expect a significant increase in this revenue category.

The Department of Sport, Arts and Culture of South Africa (“DSAC”) has increased the Association’s annual grant allocation from R2 million per year to R7 million per year. This increase was due to their valued commitment of supporting the recently launched SAFA Women’s National League. The grant funding from DSAC has also been consistent and the Association’s allocation for 2020/21 has also been conﬁrmed. In addition to the Women’s National League support, these funds are also assisting with the other football development programme costs.

The National Lotteries Commission (“NLC”) also continues to make funds available for some of the Association's activities. The previous few years funding from the NLC has been more focused towards the Women football activities. This approach is most welcome as the Association endeavours to achieve gender parity as enshrined in its Vision 2022 strategy document.

SETA / CATHSETA funding – The Association pays towards the Skills Development Levy on a regular basis. It contributes both on the permanent and non-permanent payroll. Previously it has only received training funds from CATHSETA for permanent staff training. The Association is in negotiations with CATHSETA for funding of some of its training programmes like Referees’ courses, Coaching courses and Administration Capacity building courses.

The Government has a number of initiatives that are aimed at encouraging social cohesion and healthy lifestyles and funding is provided towards these. Football plays such a signiﬁcant role in assisting the Government in its efforts. The Association will, therefore, work closely with Government so that they can fund its existing football development programmes, especially at grassroots level.

The cooperation between Government’s different spheres and the Association has resulted in a number of partnerships that have beneﬁtted both parties and this will continue into the future. Recently, the Provincial Governments of the North West and KwaZulu Natal have hosted some of the Association’s events. The eThekwini and Nelson Mandela Bay Metros have also contributed ﬁnancially and in kind through the hosting of the Men's Senior National Team ("Bafana Bafana") matches.

The Fun Valley business is a profitable one and these profits will contribute towards the financial recovery of the Association. These profits will be used to improve Fun Valley, which is now SAFA’s National Technical Centre, so that the facility can gain more patronage and improve the business’ profitability. Fun Valley hosts a number of SAFA events which include accommodating the national teams, hosting coaching courses, administration workshops, tournaments, etc. This is resulting in significant cost savings for the Association, especially accommodation costs. The National Technical Centre upgrades are still in progress but construction of 3 (three) soccer pitches and a boundary wall were completed during this financial year. This will result in cost savings of hiring soccer fields and travelling costs as well. With the FIFA Forward Programme, the Association is assured of a financial allocation for infrastructure upgrades at the National Technical Centre annually. There are also potential opportunities of getting other funders to support the development

16 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Report of the National Executive Committee of the football mother body’s National Technical Centre. The infrastructure development at the National Technical Centre will boost the Group’s income statement and balance sheet.

The development and populating of the MYSAFA.net is progressing quite well. Whilst this system is of significant value to the effective registration of players and as a competition management system, the Association is also in the process of monetising it. The commercial opportunities associated with MYSAFA.net are as follows: • Telco partnership that will benefit both SAFA and its members (Regions) • Advertising served on both the Registration and Competition systems, as well as associated applications ("apps") • Big data marketing, that is partnering with an agency to direct market to the Association's members • Presenting sponsors for apps, competition website, talent identification • Membership registration fees

The Association expect to realise the potential revenue from this stream within the next 2 years.

The Group continues to vigorously manage its costs by being innovative in the ways that it carries out its activities. Fiscal discipline is being practised across the full organisation’s spectrum. This is strengthened by, among other tools, operating with an approved budget, enforcement of procurement policies and regular ﬁnancial reporting. The Group continues to create value within the supply chain by working closely with its suppliers. The Association has also embarked on a Section 189 of the Labour Relations Act process which will result in some employees being retrenched. A new organogram and salary bands were approved by the NEC on 19 September 2020. 17 (seventeen) employees have already been terminated after accepting voluntary separation packages. This process is expected to result in a salaries cost savings of R20 million per year.

The Group continues to restructure some of its debts by negotiating favourable repayment terms. This is made possible through the healthy partnerships that is has with its service providers and relationships that were developed over a number of years.

FIFA has made available interest free loans to all its Member Associations. The Association is considering accessing these interest free loans for the purpose of settling most of its debts. FIFA’s loan repayment terms are very generous; therefore, this will greatly improve the Association’s liquidity. Currently, a huge amount of cashﬂows are allocated towards partially settling some long outstanding debts every month. So the consolidation of debts into a singular FIFA loan / debt will greatly improve the Association's current and liquidity ratios.

The National Executive Committee (“NEC”) believes that the Group will achieve its targets, which are contained in its Financial Recovery Plan. Despite the prevailing tough economic conditions, the NEC firmly believes that the Group will leverage on the popularity of the sport, football being the most popular sport in the World, to achieve its plans. The NEC is also satisfied that the Group is able to meet its working capital requirements through the normal cyclical nature of its receipts. Further, the NEC continues to intensify its efforts in monitoring the Group’s expenditure levels with a view of minimising costs through greater efficiencies. The NEC also continues to focus on maintaining an appropriate level of overheads in line with the Group’s available cash resources.

The Association, as the football controlling body in the country, is a national asset. It is due to this status that the it works very closely with the Government and enjoys its support.

The NEC is, therefore, conﬁdent that the Group is a going concern.

4. Property, plant and equipment

Details of changes in property, plant and equipment are shown in note 11 to the ﬁnancial statements.

The Association received a grant from FIFA for the development of SAFA House during the 2006 ﬁnancial year. SAFA House was built on land to which the Association was granted a right to erect improvements. This land belongs to the Department of Public Works. There is an understanding that the land on which SAFA House was built, would ultimately be transferred to the Association. At the date of this report, this has not happened and the Association is still in discussions with the Government regarding the transfer of the property to SAFA.

During the prior year, the South African Football Development Agency Trust (“SDA”) transferred its leasehold property, Alex Hub, to the South African Football Association (“SAFA”) in settlement of its loan account with SAFA. On the transfer date, the carrying value of the Alex Hub was R5,949,002 and the outstanding loan balance was R5,655,148. The property’s user and maintenance agreement with the City of Johannesburg was also ceded to SAFA.

2019 – 2020 Annual Financial Report 17 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Report of the National Executive Committee

5. Group Financial Statements

The Association has consolidated some of its subsidiaries and the reasons for this are set out below.

5.1. Africa Cup of Nations 2013 Local Organising Commitee South Africa NPC

The Africa Cup of Nations 2013 Local Organising Committee South Africa NPC was established to organise and host the Orange Africa Cup of Nations 2013 tournament in South Africa in 2013 and the African Nations Championship in 2014 (“CHAN”). The Association was granted the rights by the Confederation of African Football (“CAF”) to host these tournaments and thereafter ceded these rights to the Africa Cup of Nations 2013 Local Organising Committee South Africa NPC (“AFCON”). The Association is the sole member of this entity and has control over AFCON. The government was the major funder. This entity has therefore been consolidated. This entity is currently winding down operations.

5.2. The South African Football Association Development Agency Trust

The Association has a 100% interest in the South African Football Association Development Agency (“the Development Agency”). This entity was formed to implement and source funding for the Technical Master Plan (“TMP”). The TMP focuses on the development drive of the Association. This entity has been consolidated in the Group Financial Statements. Due to the shift in the Association’s strategic focus, the Development Agency is now being integrated into SAFA and the legal entity will be closed.

6. Tax status

On the 3rd June 2010, the Association was approved by the South African Revenue Services (“SARS”) as a public beneﬁt organisation (“PBO”) in terms of Section 30(3) of the Income Tax Act (“the Act”). This means that annual receipts and accruals will therefore be subject to section 10(1)(cN) of the Act and receipts and accruals from trading or business activities which fall outside the parameters of section 10(1)(cN) will be subject to tax. This approval means that more funds will now be available for the development of football which is in line with the key objectives of the Association.

7. Registered ofﬁce

Business address: SAFA House Postal address: PO Box 910 76 Nasrec Road Johannesburg Nasrec Ext 3 2000 Johannesburg 2000

8. Subsequent events

Impact of COVID-19

COVlD-19 is an unprecedented humanitarian crisis that existed towards the end of Association’s 2020 reporting period, and on 11 March 2020, the World Health Organization declared COVlD-19 as a pandemic.

A National State of Disaster was declared in South Africa on 15 March 2020, followed by a nationwide lockdown taking effect from 26 March 2020. The lockdown was initially set at a duration of 21 days in South Africa, and was subsequently extended indeﬁnitely under risk-adjusted levels of economic restrictions.

Management has concluded that this is a non-adjusting balance sheet event, and the impact of COVlD-19 on the accounting standard applicable to the Group and Association that requires the use of forward-looking information, expected credit losses, were assessed based on information available as at 30 June 2020.

The NEC are not aware of any other events after the reporting period that will have an impact on the ﬁnancial position, performance or cash ﬂows of the Group.

9. Auditors

The Association’s auditors are Sondlo Chartered Accountants Inc. and were appointed by the Audit and Risk Committee on 2 October 2020. This appointment will be ratiﬁed by the NEC and the Congress at their next sittings.

18 South African Football Association Independent Auditor’s Report

24 63

2019 – 2020 Annual Financial Report 19 Independent Auditor’s Report

20 South African Football Association 3

2019 – 2020 Annual Financial Report 21 Independent Auditor’s Report

22 South African Football Association 5

2019 – 2020 Annual Financial Report 23 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Statement of Proﬁt or Loss and Other Comprehensive Income

Group Association Figures in Rand Notes 2020 2019 2020 2019

Revenue 4 240,704,544 237,375,893 240,704,544 233,507,236 Other income 8 815,243 8,115,617 815,243 8,115,617 Impairment losses 5 (5,801,274) (4,715,281) (5,801,274) (4,715,281) Operating expenses (177,169,046) (308,417,620) (177,149,368) (302,830,170)

Operating proﬁt (loss) 5 58,549,467 (67,641,391) 58,569,145 (65,922,598)

Finance income 6 570,029 483,392 561,523 458,477 Finance costs 7 (4,641,957) (3,482,311) (4,641,957) (3,479,244) Other non-operating losses 9 (103,987) 5,232,408 (103,987) (5,232,408)

Proﬁt (loss) before taxation 54,373,552 (75,872,718) 54,384,724 (74,175,773) Taxation 10 - - - -

Proﬁt (loss) for the year 54,373,552 (75,872,718) 54,384,724 (74,175,773) Other comprehensive income - - - -

Total comprehensive income 54,373,552 (75,872,718) 54,384,724 (74,175,773) (loss) for the year

24 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Statement of Financial Position as at 30 June 2020

Group Association Figures in Rand Notes 2020 2019 2020 2019

Assets

Non-Current Assets Property, plant and equipment 11 104,614,059 102,679,640 104,614,059 102,679,640 Intangible assets 12 5,000,000 5,000,000 5,000,000 5,000,000 Investments in subsidiaries 13 - - - -

109,614,059 107,679,640 109,614,059 107,679,640

Current Assets Trade and other receivables 14 26,039,470 47,090,702 26,034,909 47,086,140 Cash and cash equivalents 15 17,803,899 12,978,014 17,465,209 12,636,153

43,843,369 60,068,716 43,500,118 59,722,293

Total Assets 153,457,428 167,748,356 153,114,177 167,401,933

Equity and Liabilities

Equity Retained income/(Accumulated loss) (184,526) (63,528,180) 796,545 (62,558,281)

Liabilities

Non-Current Liabilities Interest bearing loans 16 5,638,231 - 5,638,231 - Non-current portion of trade payables 8,384,192 - 8,384,192 -

14,022,423 - 14,022,423 -

Current Liabilities Trade and other payables 19 69,634,409 162,639,916 68,310,087 161,323,594 Interest bearing loans 16 3,474,931 69,041 3,474,931 69,041 Provisions 17 21,485,530 37,837,660 21,485,530 37,837,660 Income received in advance 18 45,024,661 30,729,919 45,024,661 30,729,919

139,619,531 231,276,536 138,295,209 229,960,214

Total Liabilities 153,641,954 231,276,536 152,317,632 229,960,214

Total Equity and Liabilities 153,457,428 167,748,356 153,114,177 167,401,933

2019 – 2020 Annual Financial Report 25 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Statement of Changes in Equity

Figures in Rand Retained Total equity income

Group Balance at 01 July 2018 12,344,538 12,344,538

Loss for the year (75,872,718) (75,872,718) Other comprehensive income - -

Total comprehensive loss for the year (75,872,718) (75,872,718)

Balance at 01 July 2019 (63,528,180) (63,528,180)

Proﬁt for the year 54,373,552 54,373,552 Other comprehensive income - -

Total comprehensive income for the year 54,373,552 54,373,552

Prior period error 8,970,102 8,970,102

Balance at 30 June 2020 (184,526) (184,526)

Association Balance at 01 July 2018 11,617,492 11,617,492

Loss for the year (74,175,773) (74,175,773) Other comprehensive income - -

Total comprehensive loss for the year (74,175,773) (74,175,773)

Balance at 01 July 2019 (62,558,281) (62,558,281)

Proﬁt for the year 54,384,724 54,384,724 Other comprehensive income - -

Total comprehensive income for the year 54,384,724 54,384,724

Prior period error 8,970,102 8,970,102

Balance at 30 June 2020 796,545 796,545

26 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Statement of Cash Flows

Group Association Figures in Rand Notes 2020 2019 2020 2019

Cash ﬂows from operating activities

Cash generated from operations 20 12,011,735 1,765,876 2,023,412 1,936,216 Finance income 570,029 483,392 561,523 458,477 Finance costs (4,641,957) (3,482,311) (4,641,957) (3,479,244)

Net cash generated from/(utilised in) 7,939,807 (1,233,043) 7,942,978 (1,084,551) operating activities

Cash ﬂows from investing activities

Purchase of property, plant (12,158,042) (5,424,213) (12,158,042) (5,424,213) and equipment 11 Sale of property, plant 103,986 - 103,986 - and equipment 11 Disposal of equity shares and trust units - 15,732,256 - 15,732,256 (Loss on)/proceeds from disposal of (103,987) 69,888 (103,987) 69,888 property, plant and equipment

Net cash (utilised in)/generated from (12,158,043) 10,377,931 (12,158,043) 10,377,931 investing activities

Cash ﬂows from ﬁnancing activities

Repayment of interest-bearing loans 9,044,121 (3,672,804) 9,044,121 (3,672,804)

Total cash movement for the year 4,825,885 5,472,084 4,829,056 5,620,576 Cash at the beginning of the year 12,978,014 7,505,930 12,636,153 7,015,577

Total cash at end of the year 15 17,803,899 12,978,014 17,465,209 12,636,153

2019 – 2020 Annual Financial Report 27 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Summary of Signiﬁcant Accounting Policies

Reporting entity

The South African Football Association (“Association”) is domiciled in South Africa. The Association and Group ﬁnancial statements for the year ended 30 June 2020 comprise the Association and its subsidiaries (together referred to as the “Group”). The Association is the governing body for football in South Africa. The main aim and objectives are to promote, advance, administer, co-ordinate and generally encourage the game of football in South Africa.

The ﬁnancial statements were authorised for issue by the NEC on 16 December 2020.

1. Signiﬁcant accounting policies

The principal accounting policies applied in the preparation of these consolidated and separate Group ﬁnancial statements and Association ﬁnancial statements are set out below.

1.1 Basis of preparation

These Group financial statements and Association financial statements are presented in South African Rands which is the functional currency of the Group and the Association and the presentation currency for the financial statements.

The Group financial statements and Association financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) on the historical cost basis, except for the revaluation of certain financial instruments which are stated at fair value.

1.2 Summary of signiﬁcant policies

The principal accounting policies adopted in the preparation of these Group ﬁnancial statements and Association ﬁnancial statements are set out below and are consistent in all material respects for the Group with those applied in the previous year.

Debt instruments at amortised cost

The NEC assessed the loans and receivables for impairment at the end of the current financial period. In determining whether an impairment loss should be recorded in the statement of comprehensive income, the Group makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from the financial asset.

1.3 Signiﬁcant judgements and sources of estimation uncertainty

The preparation of group ﬁnancial statements and association ﬁnancial statements in conformity with IFRS requires management, from time to time, to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. These estimates and associated assumptions are based on experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Information about critical judgements in applying accounting policies that have the most signiﬁcant effect on the amounts recognised in the notes.

Key sources of estimation uncertainty

Impairment of assets

Property, plant and equipment are considered for impairment if there is a reason to believe that impairment may be necessary. Factors taken into consideration in reaching such a decision include the economic viability of the asset itself and speciﬁc usage requirements.

28 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Summary of Signiﬁcant Accounting Policies

1.3 Signiﬁcant judgements and sources of estimation uncertainty (continued)

Assets lives and residual values

Property, plant and equipment are depreciated over its useful life taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In reassessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

Trademarks

The Association’s management performs annual assessments as to possible impairments of the Bafana Bafana trademark taking into account its estimated fair value.

Contingent liabilities

Management applies its judgement to the fact patterns and advice it receives from its attorneys, advocates and other advisors in assessing if an obligation is probable, more likely than not, or remote. This judgement application is used to determine if the obligation is recognised as a liability or disclosed as a contingent liability.

1.4 Property, plant and equipment

Property, plant and equipment that have been acquired is stated at historical cost less accumulated depreciation and accumulated impairment losses. Property, plant and equipment that is received as donations are initially recorded at the fair value of the assets received.

Depreciation is charged so as to write off the cost of assets over their estimated useful lives to their residual values, using the straight line method.

Property, plant and equipment is initially measured at cost. Cost includes all of the expenditure which is directly attributable to the acquisition or construction of the asset, including the capitalisation of borrowing costs on qualifying assets.

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Depreciation method Average useful life Buildings Straight line 5% Leasehold property - SAFA House Straight line 5% Leasehold property - Alex Hub Straight line 10% Furniture and fittings Straight line 16.7% Motor vehicles Straight line 20% Office equipment Straight line 20% Computer equipment and software Straight line 33.3% General equipment Straight line 20% Buses Straight line 20% Land and buildings – Artificial pitch Straight line 12.5% Land and buildings – grass pitches Straight line 5% Capital – Work in progress Not depreciated 0%

Land and buildings are stated at cost less accumulated depreciation and impairment losses. Costs include expenditure that is directly attributable to the cost of the asset.

Depreciation is charged so as to write-off the cost of property, plant and equipment over their expected useful life using the straight-line basis. Land is not depreciated. The expected useful lives, residual values and depreciation methods are reviewed at each reporting date.

2019 – 2020 Annual Financial Report 29 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Summary of Signiﬁcant Accounting Policies

1.4 Property, plant and equipment (continued)

Subsequent expenditure is recognised at cost in the carrying amount of property, plant and equipment if it is probable that future economic benefits embodied in the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in profit or loss as an expense.

Leasehold improvements are capitalised and written-off in accordance with the expected lease period. The expected useful lives, residual values and depreciation method are reviewed at each reporting date. The effect of any changes in estimate is accounted for in the year the change occurs.

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in proﬁt or loss.

1.5 Intangible assets

Trademarks

Trademarks acquired by the Group, which have an indeﬁnite useful life, are measured at the cost less accumulated impairment losses. These trademarks are not amortised but are tested annually for impairment.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands is recognised in profit or loss as incurred.

1.6 Basis of consolidation

Investment in subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect these returns through its power over the entity. The ﬁnancial statements of subsidiaries are included in the consolidated ﬁnancial statements from the date that control commences until the date that control ceases.

The Group ﬁnancial statements incorporate the assets, liabilities and results of the operations of the Association and its subsidiaries. The results of subsidiaries acquired and disposed of during a ﬁnancial year are included from the effective dates of acquisition and to the effective dates of disposal.

Transactions eliminated on consolidation

Intra group balances and any unrealised gains and losses or income and expenses arising from intra group transactions, are eliminated in preparing the consolidated ﬁnancial statements.

1.7 Impairment of assets

At each reporting date, the Group reviews the carrying amounts of its tangible and trademarks to determine whether there is any indication that those assets may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount for an individual asset, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the

30 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Summary of Signiﬁcant Accounting Policies

1.7 Impairment of assets (continued) carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately in proﬁt or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash- generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately in proﬁt or loss.

1.8 Income received in advance

Funds received from sponsors and other contract suppliers, which do not meet the recognition of revenue associated with contracts, are deferred and recorded as “income received in advance” and amortised to the income statement as the recognition criteria are met or over the terms of the contracts.

1.9 Financial instruments: IFRS 9

Financial instruments held by the Group are classiﬁed in accordance with the provisions of IFRS 9 Financial Instruments.

Broadly, the classiﬁcation possibilities, which are adopted by the Group, as applicable, are as follows:

Financial assets which are debt instruments: • Amortised cost. This category applies only when the contractual terms of the instrument give rise, on specified dates, to cash flows that are solely payments of principal and interest on principal, and where the instrument is held under a business model whose objective is met by holding the instrument to collect contractual cash flows; or

• Mandatorily at fair value through proﬁt or loss. This classiﬁcation automatically applies to all debt instruments which do not qualify as at amortised cost or at fair value through other comprehensive income; or

Financial liabilities: • Amortised cost

Note 25 Financial instruments and risk management presents the financial instruments held by the Group based on their specific classifications.

The specific accounting policies for the classification, recognition and measurement of each type of financial instrument held by the Group are presented below:

Trade and other receivables

Classiﬁcation

Trade and other receivables, excluding, when applicable, VAT and prepayments, are classiﬁed as ﬁnancial assets subsequently measured at amortised cost (note 14).

They have been classified in this manner because their contractual terms give rise, on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding, and the Group's business model is to collect the contractual cash flows on trade and other receivables.

Recognition and measurement

Trade and other receivables are recognised when the Group becomes a party to the contractual provisions of the receivables. They are measured, at initial recognition, at fair value plus transaction costs, if any.

2019 – 2020 Annual Financial Report 31 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Summary of Signiﬁcant Accounting Policies

1.9 Financial instruments: IFRS 9 (continued)

They are subsequently measured at amortised cost.

The amortised cost is the amount recognised on the receivable initially, minus principal repayments, plus cumulative amortisation (interest) using the effective interest method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance.

Impairment

The Group recognises a loss allowance for expected credit losses on trade and other receivables, excluding VAT and prepayments. The amount of expected credit losses is updated at each reporting date.

The Group measures the loss allowance for trade and other receivables at an amount equal to lifetime expected credit losses (lifetime ECL), which represents the expected credit losses that will result from all possible default events over the expected life of the receivable.

Measurement and recognition of expected credit losses

The Group makes use of a provision matrix as a practical expedient to the determination of expected credit losses on trade and other receivables. The provision matrix is based on historic credit loss experience, adjusted for factors (probability of default and loss given default) that are speciﬁc to the debtors at the reporting date.

In measuring the ECL, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort.

The Group is following the Simplified Approach for impairment as an alternative available in IFRS 9 with impairment losses measured at lifetime Expected Credit Loss (ECL) for trade receivables as there are no significant financing component to trade receivables.

Write off policy

The Group writes off a receivable when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings. Receivables written off may still be subject to enforcement activities under the Group recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.

Credit risk

Details of credit risk are included in the trade and other receivables note (note 14) and the ﬁnancial instruments and risk management note (note 25).

Borrowings and interest-bearing loans

Classiﬁcation

Borrowings and interest-bearing loans are classiﬁed as ﬁnancial liabilities subsequently measured at amortised cost.

Recognition and measurement

Borrowings and interest-bearing loans are recognised when the group becomes a party to the contractual provisions of the loan. The loans are measured, at initial recognition, at fair value plus transaction costs, if any.

They are subsequently measured at amortised cost using the effective interest rate method.

32 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Summary of Signiﬁcant Accounting Policies

1.9 Financial instruments: IFRS 9 (continued)

Interest expense, calculated on the effective interest method, is included in proﬁt or loss in ﬁnance costs (note 7).

Borrowings expose the Group to liquidity risk and interest rate risk. Refer to note 25 for details of risk exposure and management thereof.

Trade and other payables

Classiﬁcation

Trade and other payables (note 19), excluding VAT and amounts received in advance, are classiﬁed as ﬁnancial liabilities subsequently measured at amortised cost.

Recognition and measurement

They are recognised when the Group becomes a party to the contractual provisions, and are measured, at initial recognition, at fair value plus transaction costs, if any.

They are subsequently measured at amortised cost using the effective interest method.

If trade and other payables contain a significant financing component, and the effective interest method results in the recognition of interest expense, then it is included in profit or loss in finance costs (note 7).

Trade and other payables expose the Group to liquidity risk and possibly to interest rate risk. Refer to note 25 for details of risk exposure and management thereof.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits held on call with banks and bank overdrafts. Bank overdrafts that are repayable on demand and form part of an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash ﬂows.

Cash and cash equivalents are stated at carrying amount which is deemed to be fair value.

Derecognition

Financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities

The Group derecognises financial liabilities when, and only when, the Group obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

2019 – 2020 Annual Financial Report 33 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Summary of Signiﬁcant Accounting Policies

1.10 Foreign exchange

Foreign currency transactions

Transactions in currencies other than the Group’s functional currency (Rands) are initially recorded at the rates of exchange ruling on the date of the transactions.

Exchange rate differences arising from the settlement of monetary items or on reporting the Group’s monetary items at rates different from those at which they are initially recorded are recognised as proﬁt or loss in the period in which they arise.

1.11 Leases

The Group assesses whether a contract is, or contains a lease, at the inception of the contract.

A contract is, or contains a lease if the contract conveys the right to control the use of an identiﬁed asset for a period of time in exchange for consideration.

In order to assess whether a contract is, or contains a lease, management determine whether the asset under consideration is "identified", which means that the asset is either explicitly or implicitly specified in the contract and that the supplier does not have a substantial right of substitution throughout the period of use. Once management has concluded that the contract deals with an identified asset, the right to control the use thereof is considered. To this end, control over the use of an identified asset only exists when the group has the right to substantially all of the economic benefits from the use of the asset as well as the right to direct the use of the asset.

The Group and Association assessed whether a contract is or contains a lease, at inception of a contract. The company recognises a right- of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee.

Group as lessee

A lease liability and corresponding right-of-use asset are recognised at the lease commencement date, for all lease agreements for which the group is a lessee, except for short-term leases of 12 months or less, or leases of low value assets. For these leases, the group recognises the lease payments as an operating expense (note 5) on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic beneﬁts from the leased asset are consumed.

Lease liability

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the group uses its incremental borrowing rate.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise the following:

• Fixed lease payments, including in-substance ﬁxed payments, less any lease incentives; • Lease payments in an optional renewal period if the group is reasonably certain to exercise an extension option; and • Penalties for early termination of a lease, if the lease term reﬂects the exercise of an option to terminate the lease.

34 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Summary of Signiﬁcant Accounting Policies

1.11 Leases (continued)

Right-of-use assets

Lease payments included in the measurement of the lease liability comprise the following: • the initial amount of the corresponding lease liability; • any lease payments made at or before the commencement date; • any initial direct costs incurred; • any estimated costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, when the group incurs an obligation to do so, unless these costs are incurred to produce inventories; and • less any lease incentives received.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. However, if a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reﬂects that the group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. Depreciation starts at the commencement date of a lease.

Group as lessor

Leases for which the group is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. Lease classification is made at inception and is only reassessed if there is a lease modification.

When the group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease. If the head lease is a short-term lease to which the group applies the exemption described previously, then it classifies the sub-lease as an operating lease.

The various lease and non-lease components of contracts containing leases are accounted for separately, with consideration being allocated by applying IFRS 15.

Operating leases

Lease payments from operating leases are recognised on a straight-line basis over the term of the relevant lease, or on another systematic basis if that basis is more representative of the pattern in which the beneﬁts form the use of the underlying asset are diminished. Operating lease income is included in other operating income (note 8).

Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and are expensed over the lease term on the same basis as the lease income.

Modiﬁcations made to operating leases are accounted for as a new lease from the effective date of the modiﬁcation. Any prepaid or accrued lease payments relating to the original lease are treated as part of the lease payments of the new lease.

1.12 Leases (Comparatives under IAS 17)

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at the lower fair value and the present value of minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Finance costs, which represent the

2019 – 2020 Annual Financial Report 35 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Summary of Signiﬁcant Accounting Policies

1.12 Leases (Comparatives under IAS 17) (continued)

difference between the total minimum lease payments and the present value of the minimum lease payments, are recognised in proﬁt or loss over the term of the relevant lease so as to produce a constant periodic rate of interest on the remaining balance of the obligations for each reporting period.

Operating lease payments are recognised as an expense on a straight line basis over the lease term.

1.13 Finance income / costs

Finance income comprises interest income on cash and cash equivalents. Interest income is recognised, in proﬁt or loss, using the effective interest rate method.

Finance costs comprise interest expenses from ﬁnancial liabilities. Interest expenses is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the period to maturity, when it is probable that such expense will accrue to the Group.

1.14 Share capital and equity

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Ordinary shares are recognised at par value and classiﬁed as 'share capital' in equity. Any amounts received from the issue of shares in excess of par value is classiﬁed as 'share premium' in equity. Dividends are recognised as a liability in the group in which they are declared.

1.15 Employee beneﬁts

Current employee beneﬁts

The cost of all short term employee beneﬁts is recognised during the period in which the employee renders the related service.

The accruals for employee entitlements to wages, salaries and annual leave represent the amount which the Group has a present obligation to pay as a result of employees’ services provided to the statement of ﬁnancial position date. The accruals have been calculated at undiscounted amounts based on current wage and salary rates.

Retirement beneﬁts

Contributions to retirement contribution funds are recognised in proﬁt or loss in the year when the employees have rendered service entitling them to the contributions.

1.16 Provisions and contingencies

Provisions are recognised when: • the Group has a present obligation as a result of a past event; • it is probable that an outﬂow of resources embodying economic beneﬁts will be required to settle the obligation; and • a reliable estimate can be made of the obligation.

The amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the

36 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Summary of Signiﬁcant Accounting Policies

1.16 Provisions and contingencies (continued) reimbursement shall not exceed the amount of the provision.

Provisions are not recognised for future operating losses.

If an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision.

After their initial recognition contingent liabilities recognised in business combinations that are recognised separately are subsequently measured at the higher of: • the amount that would be recognised as a provision; and • the amount initially recognised less cumulative amortisation.

1.17 Revenue from contracts with customers

The Group recognises revenue from contracts with customers from the following major sources: • Ticketing revenue • Television broadcasting rights • Host cities' income • Sponsorship income • Income from day visitors and use of facilities

Revenue is measured based on the consideration speciﬁed in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer.

No revenue is recognised if there are signiﬁcant uncertainties regarding recovery of the consideration due.

The Group recognises revenue from contracts with customers as follows:

Ticketing revenue

Revenue in respect of ticket sales is accounted for when the control of the tickets is transferred to the buyer, when the event has taken place and it is probable that economic beneﬁts will ﬂow to the Group.

Television broadcasting rights

Revenue from broadcasting rights are recognised when the relevant event has been broadcasted to the public and there is reasonable assurance that the Group has carried out its performance obligations by complying with the conditions attached to the broadcasting rights.

Host cities' income

Revenue from Host Cities for sponsorship of events is recognised in the period in which the event takes place. The performance obligations are deﬁned as successful hosting of an event.

Recoveries from Host Cities are offset against the related expenses that have been incurred.

Sponsorship income

Revenue from sponsors and others, which is receivable in terms of contracts, is recognised on a straight-line basis over the term of such contracts.

Revenue received from afﬁliation, match and other fees is recognised in proﬁt or loss when the Group is entitled to such revenue.

2019 – 2020 Annual Financial Report 37 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Summary of Signiﬁcant Accounting Policies

1.17 Revenue from contracts with customers (continued)

Sponsorship income (continued)

Revenue received from CAF in respect of the national teams qualiﬁcation in terms of CAF tournaments is recognised in proﬁt or loss once the event has occurred and the group is entitled to such revenue.

Revenue from CAF for share of sponsorship income is recognised in proﬁt or loss when the Group is entitled to such revenue and there is reasonable assurance that the entity complies with the conditions attached to the share of income.

Revenue from FIFA is recognised in proﬁt or loss when the Group is entitled to such revenue and there is reasonable assurance that the entity complies with the conditions attached to the share of income.

Income from day visitors and use of facilities

Revenue from the National Technical Centre comprises accommodation facilities, rental and daily visitors’ entrance fees and is recognised when the services are provided.

Revenue other than from contracts with customers

Grants received

Grants that compensate the Group for expenses incurred are recognised in proﬁt or loss as other income on a systematic basis in the period which the expenses are recognised.

Government grants are recognised in proﬁt or loss on a systematic basis in the period in which the expense is recognised and there is reasonable assurance that the entity will comply with the conditions attached and the grant will be received.

The Group recognises a grant related to an asset on a business acquisition in proﬁt or loss when the Group has complied with the conditions attached to the grant and the grant becomes receivable.

38 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

2. Changes in accounting policy

The Group ﬁnancial statements and Association ﬁnancial statements have been prepared in accordance with International Financial Reporting Standards on a basis consistent with the prior year except for the adoption of the following new or revised standards.

Application of IFRS 16 Leases

In the current year, the Association has adopted IFRS 16 Leases (as issued by the IASB in January 2016) with the date of initial application being 01 July 2019. IFRS 16 replaces IAS 17 Leases.

IFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to the lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of a right-of-use asset and a lease liability at the lease commencement for all leases, except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged. Details of these new requirements are described in the accounting policy for leases. The impact of the adoption of IFRS 16 on the Group's financial statements and Association’s financial statements is described below.

The Association has applied the practical expedient available in IFRS 16 which provides that for contracts which exist at the initial application date, an entity is not required to reassess whether they contain a lease. This means that the practical expedient allows an entity to apply IFRS 16 to contracts identiﬁed by IAS 17 and IFRIC 4 as containing leases; and to not apply IFRS 16 to contracts that were not previously identiﬁed by IAS 17 and IFRIC 4 as containing leases.

Impact on ﬁnancial statements

The Association has assessed its operating leases as at 30 June 2019 and has determined the leases to be short-term, where the remaining lease term is less than 12 months from this date. This determination was made in accordance with the deﬁnition of lease. Where applicable, options to extend or not to terminate the leases were considered. No leases contained an option to purchase.

In accordance with IFRS 16.5 the Association applies the short-term leases exemption to the above leases and as such has not recognised right-of-use assets and lease liabilities for these leases. Lease payments on short-term leases are recognised as an expense on a straight-line basis over the lease term, presenting no change to the recognition of operating leases prior to the adoption of this standard. There has been no impact to the Association’s ﬁnancial position upon adoption.

2019 – 2020 Annual Financial Report 39 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

3. New Standards and Interpretations

3.1 Standards and interpretations effective and adopted in the current year

In the current year, the Group has adopted the following standards and interpretations that are effective for the current ﬁnancial year and that are relevant to its operations:

Standard / Interpretation: Effective date: Expected impact: Years beginning on or after

• Plan Amendment, Curtailment or Settlement - 01 January 2019 The impact of the Amendments to IAS 19 amendment is not material • Amendments to IAS 12 Income Taxes: Annual 01 January 2019 The impact of the Improvements to IFRS 2015 - 2017 cycle amendment is not material • Amendments to IAS 23 Borrowing Costs: Annual 01 January 2019 The impact of the Improvements to IFRS 2015 - 2017 cycle amendment is not material • IFRIC 23 Uncertainty over Income Tax Treatments 01 January 2019 The impact of the standard is not material • IFRS 16 Leases 01 January 2019 The impact of the standard is not material

3.2 Standards and interpretations not yet effective

The Group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the Group’s accounting periods beginning on or after 01 July 2020 or later periods:

Standard / Interpretation: Effective date: Expected impact: Years beginning on or after

• Amendments to References to the Conceptual Framework 01 January 2020 Unlikely there will be a in IFRS Standards material impact • Interest Rate Benchmark Reform - Amendments to IFRS 9, 01 January 2020 Unlikely there will be a IAS 39 and IFRS 7 material impact • Presentation of Financial Statements: Disclosure initiative 01 January 2020 Unlikely there will be a material impact • Accounting Policies, Changes in Accounting Estimates and 01 January 2020 Unlikely there will be a Errors: Disclosure initiative material impact • COVID-19 - Related Rent Concessions - Amendment to IFRS 01 January 2020 Unlikely there will be a material impact • Annual Improvements to IFRS Standards 2018 - 2020 01 January 2020 Unlikely there will be a material impact • Onerous Contracts: Cost of Fulﬁlling a Contract 01 January 2020 Unlikely there will be a material impact • Deﬁnition of a business - Amendments to IFRS 3 01 January 2020 Unlikely there will be a material impact • Accounting Policies, Changes in Accounting Estimates and 01 January 2020 Unlikely there will be a Errors: Disclosure initiative material impact

40 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

Group Association Figures in Rand 2020 2019 2020 2019

4. Revenue

Revenue from contracts with customers Ticketing revenue 349,292 342,391 349,292 342,391 National Technical Centre - day visitors and 4,234,937 5,893,277 4,234,937 5,893,277 use of facilities Sponsorship income 170,502,493 189,035,618 170,502,493 185,166,961 Host cities' income 4,152,626 3,148,368 4,152,626 3,148,368

179,239,348 198,419,654 179,239,348 194,550,997

Revenue other than from contracts with customers

Rental Income 391,956 133,523 391,956 133,523 Grants received 61,073,240 38,822,716 61,073,240 38,822,716

61,465,196 38,956,239 61,465,196 38,956,239

240,704,544 237,375,893 240,704,544 233,507,236

Disaggregation of revenue from contracts with customers

The Group disaggregates revenue from customers as follows:

Ticketing revenue 349,292 342,391 349,292 342,391 National Technical Centre - day visitors and 4,234,937 5,893,277 4,234,937 5,893,277 use of facilities Sponsorship income 170,502,493 189,035,618 170,502,493 185,166,961 Host cities' income 4,152,626 3,148,368 4,152,626 3,148,368

179,239,348 198,419,654 179,239,348 194,550,997 Timing of revenue recognition

At a point in time Ticketing revenue 349,292 342,391 349,292 342,391 Host cities' income 4,152,626 3,148,368 4,152,626 3,148,368 Sponsorhip income 47,049,783 42,211,799 49,618,184 38,343,143 National Technical Centre - day visitors and 4,234,937 5,893,277 4,234,937 5,893,277 use of facilities

55,786,638 51,595,835 58,355,039 47,727,179 Over time Sponsorship income 123,452,710 146,823,819 120,884,309 146,823,818

Total revenue from contracts with customers

179,239,348 198,419,654 179,239,348 194,550,997

2019 – 2020 Annual Financial Report 41 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

Group Association Figures in Rand 2020 2019 2020 2019

5. Operating proﬁt

Operating proﬁt (loss) for the year is stated after accounting for the following, amongst others:

Depreciation

Buildings - Fun Valley 3,297,636 3,216,226 3,297,636 3,216,226 Leasehold property - SAFA House 3,045,135 3,045,305 3,045,135 3,045,305 Leasehold property - Alex Hub 1,049,824 1,049,824 1,049,824 349,941 Land and Buildings - Artificial Pitch 522,799 - 522,799 - Furniture and fittings 557,912 558,619 557,912 558,619 Motor vehicles 187,572 168,664 187,572 168,664 Office equipment 92,412 93,874 92,412 93,874 Computer equipment 745,619 838,169 745,619 838,169 Land and Buildings - 2x Natural Grass Pitch 66,467 - 66,467 - General equipment 554,262 385,875 554,262 385,875 Buses 1 - 1 -

10,119,637 9,356,556 10,119,637 8,656,673

Impairment losses Receivables written off as uncollectable 2,582,149 - 2,582,149 - Net movement in allowance for credit losses 3,219,125 4,715,281 3,219,125 4,715,281

5,801,274 4,715,281 5,801,274 4,715,281

Other Accounting fees 1,703,733 12,321,366 1,703,733 12,321,366 Auditor's remuneration 1,181,679 1,190,203 1,181,679 1,190,203 Employee costs 40,403,585 40,811,222 40,403,585 40,171,700 Pension fund contributions 4,149,321 7,265,741 4,149,321 7,265,741 Legal and consulting fees 8,243,370 13,185,287 8,243,370 13,185,287 Key management personnel remuneration 7,680,197 9,335,407 7,680,197 9,335,407 NEC honoraria 2,400,388 2,831,817 2,400,388 2,831,817 NEC allowances 1,226,359 933,856 1,226,359 933,856

6. Finance income

Investments in ﬁnancial assets: Bank 570,029 483,392 561,523 458,477

7. Finance costs

Foreign exchange loss 746,279 191,850 746,279 191,850 Interest paid - South African Revenue Service 740,167 364,813 740,167 364,813 Interest paid - bank and ﬁnance charges 435,456 122,336 435,456 119,269 Interest paid - suppliers 2,720,055 2,623,312 2,720,055 2,623,312 Interest paid - 2010 FIFA World Cup Legacy Trust - 180,000 - 180,000

Total ﬁnance costs 4,641,957 3,482,311 4,641,957 3,479,244

42 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

Group Association Figures in Rand 2020 2019 2020 2019

8. Other income

Dividends received on Netcare shares - 762,527 - 762,527 Interest charges on SABC debtor - 2,913,212 - 2,913,212 Donations in kind from Healthy Lifestyle - 1,264,011 - 1,264,011 Other sundry income 815,243 3,175,867 815,243 3,175,867

815,243 8,115,617 815,243 8,115,617

9. Other non-operating losses

Fair value losses (Loss) proﬁt on sale on non-current assets (103,987) 69,888 (103,987) 69,888 Decrease in fair value of ﬁnancial asset - (5,302,296) - (5,302,296)

Total other non-operating losses (103,987) (5,232,408) (103,987) (5,232,408)

10. Taxation

On the 3 June 2010, the Association was approved by the South African Revenue Services (“SARS”) as a public beneﬁt organisation (“PBO”) in terms of Section 30(3) of the Income Tax Act (“the Act”). This means that annual receipts and accruals in relation to the principle business of development of amateur football will therefore be subject to section 10(1)(cN) of the Act and receipts and accruals, from trading or business activities which fall outside the parameters of section 10(1)(cN) will be subject to tax. However, Section 11 (a) and 11 (E) provides for a deduction in respect of non- capital expenditure whether business or development related.

The Africa Cup of Nations 2013 Local Organising Committee South Africa NPC, the South African Football Association Infrastructure Development Foundation and the South African Football Association Development Agency Trust have also been approved by SARS as a public beneﬁt organisation (“PBO”) in terms of Section 30 of the Income Tax Act and the receipts and accruals will therefore not be subject to section 10(1)(cN) of the Act.

No provision has been made for 2020 taxation as the Association and its subsidiaries are in a computed loss position. A deferred tax asset in respect of computed tax losses has not been recognised as it is not probable that future taxable proﬁt will be available against which the Group could utilise this asset.

2019 – 2020 Annual Financial Report 43 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

11. Property, plant and equipment

Group 2020 2019

Cost Accumulated Carrying Cost Accumulated Carrying depreciation value depreciation value

Land and buildings - 75,785,071 (14,945,012) 60,840,059 75,428,974 (11,647,376) 63,781,598 Fun Valley Leasehold property - 6,298,943 (1,399,765) 4,899,178 6,298,943 (349,941) 5,949,002 Alex Hub Leasehold property - 60,902,699 (39,087,435) 21,815,264 60,902,870 (36,042,471) 24,860,399 SAFA House Land and Buildings - 7,169,820 (522,799) 6,647,021 - - - Artificial Pitch Land and Buildings - 5,317,346 (66,467) 5,250,879 - - - 2x Natural Grass Pitch Land and Buildings - 1,307,717 - 1,307,717 2,438,747 - 2,438,747 Assets Under Construction Furniture and fittings 4,545,808 (3,529,184) 1,016,624 5,494,769 (3,920,233) 1,574,536 Motor vehicles 4,041,089 (3,940,273) 100,816 17,509,890 (17,117,516) 392,374 Office equipment 470,336 (237,773) 232,563 745,100 (420,125) 324,975 Computer equipment 3,749,316 (3,117,368) 631,948 5,360,550 (4,011,815) 1,348,735 General equipment 2,678,008 (1,277,707) 1,400,301 3,769,982 (2,232,396) 1,537,586 Buses 7,471,563 (6,999,874) 471,689 29,738,994 (29,267,306) 471,688

Total 179,737,716 (75,123,657) 104,614,059 207,688,819 (105,009,179) 102,679,640

Association 2020 2019

Cost Accumulated Carrying Cost Accumulated Carrying depreciation value depreciation value

Land and buildings - 75,785,071 (14,945,012) 60,840,059 75,428,974 (11,647,376) 63,781,598 Fun Valley Leasehold property - 6,298,943 (1,399,765) 4,899,178 6,298,943 (349,941) 5,949,002 Alex Hub Leasehold property - 60,902,699 (39,087,435) 21,815,264 60,902,870 (36,042,471) 24,860,399 SAFA House Land and Buildings - 7,169,820 (522,799) 6,647,021 - - - Artificial Pitch Land and Buildings - 5,317,346 (66,467) 5,250,879 - - - 2x Natural Grass Pitch Capital – Work in progress 1,307,717 - 1,307,717 2,438,747 - 2,438,747 Furniture and fittings 4,545,808 (3,529,184) 1,016,624 5,494,769 (3,920,233) 1,574,536 Motor vehicles 4,041,089 (3,940,273) 100,816 17,509,890 (17,117,516) 392,374 Office equipment 470,336 (237,773) 232,563 745,100 (420,125) 324,975 Computer equipment 3,749,316 (3,117,368) 631,948 5,298,950 (3,950,215) 1,348,735 General equipment 2,678,008 (1,277,707) 1,400,301 3,769,982 (2,232,396) 1,537,586 Buses 7,471,563 (6,999,874) 471,689 29,738,994 (29,267,306) 471,688

Total 179,737,716 (75,123,657) 104,614,059 207,627,219 (104,947,579) 102,679,640

44 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

11. Property, plant and equipment (continued)

Reconciliation of property, plant and equipment - Group - 2020

Opening Additions Disposals Transfers Depreciation Total balance

Land and buildings - 63,781,598 356,097 - - (3,297,636) 60,840,059 Fun Valley Leasehold property - 5,949,002 - - - (1,049,824) 4,899,178 Alex Hub Leasehold property - 24,860,399 - - - (3,045,135) 21,815,264 SAFA House Land and Buildings - - 7,169,820 - - (522,799) 6,647,021 Artificial Pitch Furniture and fittings 1,574,536 - - - (557,912) 1,016,624 Motor vehicles 392,374 - (103,986) - (187,572) 100,816 Office equipment 324,975 - - - (92,412) 232,563 Computer equipment 1,348,735 28,832 - - (745,619) 631,948 Land and Buildings - - - - 5,317,346 (66,467) 5,250,879 2x Natural Grass Pitch General equipment 1,537,586 416,977 - - (554,262) 1,400,301 Buses 471,688 - - - 1 471,689 Capital - Work in progress 2,438,747 4,186,316 - (5,317,346) - 1,307,717

102,679,640 12,158,042 (103,986) - (10,119,637) 104,614,059

Reconciliation of property, plant and equipment - Group - 2019

Opening Additions Depreciation Total balance

Land and buildings - Fun Valley 65,502,697 1,495,127 (3,216,226) 63,781,598 Leasehold property - Alex Hub 6,998,826 - (1,049,824) 5,949,002 Leasehold property - SAFA House 27,905,686 18 (3,045,305) 24,860,399 Furniture and ﬁttings 2,133,155 - (558,619) 1,574,536 Motor vehicles 419,138 141,900 (168,664) 392,374 Ofﬁce equipment 408,692 10,157 (93,874) 324,975 Computer equipment 2,007,760 179,144 (838,169) 1,348,735 General equipment 764,343 1,159,118 (385,875) 1,537,586 Buses 471,686 2 - 471,688 Capital - Work in progress - 2,438,747 - 2,438,747

106,611,983 5,424,213 (9,356,556) 102,679,640

2019 – 2020 Annual Financial Report 45 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

11. Property, plant and equipment (continued)

Reconciliation of property, plant and equipment - Association - 2020

Opening Additions Disposals Transfers Depreciation Total balance

102,679,640 12,158,042 (103,986) - (10,119,637) 104,614,059

Reconciliation of property, plant and equipment - Association - 2019

Opening Additions Transfers Depreciation Total balance

Land and buildings - Fun Valley 65,502,697 1,495,127 - (3,216,226) 63,781,598 Leasehold property - Alex Hub - - 6,298,943 (349,941) 5,949,002 Leasehold property - SAFA House 27,905,686 18 - (3,045,305) 24,860,399 Furniture and ﬁttings 2,133,155 - - (558,619) 1,574,536 Motor vehicles 419,138 141,900 - (168,664) 392,374 Ofﬁce equipment 408,692 10,157 - (93,874) 324,975 Computer equipment 2,007,760 179,144 - (838,169) 1,348,735 General equipment 764,343 1,159,118 - (385,875) 1,537,586 Buses 471,686 2 - - 471,688 Capital - Work in progress - 2,438,747 - - 2,438,747

99,613,157 5,424,213 6,298,943 (9,356,556) 102,679,640

Included in the cost of buses and related accumulated depreciation, are buses that were fully depreciated and written off in prior years but are still in use.

SAFA House has been erected on land that is not owned by the Association and therefore disclosed as leasehold property. Refer to the NEC Report regarding title to SAFA House. Land and buildings relates to the National Technical Centre (Fun Valley) property situated at portion 45 at Olifantsvlei 316, Johannesburg, Gauteng.

46 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

11. Property, plant and equipment (continued)

Alex Hub has been erected on land that is not owned by the Association and therefore disclosed as leasehold property. The property is situated on ERF 6158, Alexandra Township, Registration Division I.R. in Gauteng. The use period of the land is a period of nine (9) years and eleven (11) months from the commencement date on 12 March 2015.

Addition of work in progress asset category

Grass pitches that had not been completed as at 28 February 2019 had been included under the Fun Valley land and buildings. In order to better reflect the state of operations and provide a clearer understanding of the Association's and Group's assets held, an additional asset category was created and a reclassification done bewteen the Fun Valley land and buildings and capital work in progress. The 2019 comparative figures presented above are thus not comparable to the 2019 financial statements. Refer to note 23 for more detail.

12. Intangible assets 2020 2019

Group Cost Accumulated Carrying Cost Accumulated Carrying amortisation value amortisation value

Bafana Bafana trademark 5,000,000 - 5,000,000 5,000,000 - 5,000,000

2020 2019

Association Cost Accumulated Carrying Cost Accumulated Carrying amortisation value amortisation value

Bafana Bafana trademark 5,000,000 - 5,000,000 5,000,000 - 5,000,000

Reconciliation of intangible assets - Group - 2020 Opening Total balance Bafana Bafana trademark 5,000,000 5,000,000

Reconciliation of intangible assets - Group - 2019 Opening Total balance Bafana Bafana trademark 5,000,000 5,000,000

Reconciliation of intangible assets - Association - 2020 Opening Total balance Bafana Bafana trademark 5,000,000 5,000,000

Reconciliation of intangible assets - Association - 2019 Opening Total balance Bafana Bafana trademark 5,000,000 5,000,000

2019 – 2020 Annual Financial Report 47 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

12. Intangible assets (continued)

The trademark was acquired in 2011 and the Association has sole rights and exclusive usage. The trademark is considered to have an indeﬁnite useful life as it is associated with the senior men’s national football team. The name is widely known and popular. Football is one of the most popular sports in South Africa and internationally and therefore the team will continue to receive the support of the majority of people, including the Government for many years. Management considers the fair value of the trademark to be in excess of its carrying value.

13. Investments in subsidiaries

The following table lists the entities which are controlled by the Group, either directly or indirectly through subsidiaries.

Group

Name of subsidiary Proportion of Carrying Carrying ownership amount 2020 amount 2019

South African Football Association Infrastructure Development Foundation * 100.00 % - - Africa Cup of Nations 2013 Local Organising Committee South Africa NPC ** 100.00 % - - The South African Football Association Development Agency Trust * 100.00 % - -

- -

* To be deregistered. ** Dormant.

Group Association Figures in Rand 2020 2019 2020 2019

14. Trade and other receivables

Financial instruments: Sponsorships and related income 24,021,604 35,378,622 24,021,604 35,378,622 Loss allowance (11,599,451) (9,017,302) (11,599,451) (9,017,302)

Trade receivables at amortised cost 12,422,153 26,361,320 12,422,153 26,361,320 Other receivables 6,660,940 16,627,409 6,660,940 16,627,409

Non-ﬁnancial instruments: VAT 6,251,232 3,994,885 6,246,671 3,990,323 Prepayments 705,145 107,088 705,145 107,088

Total trade and other receivables 26,039,470 47,090,702 26,034,909 47,086,140

48 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

Group Association Figures in Rand 2020 2019 2020 2019

14. Trade and other receivables (continued)

Categorisation of trade and other receivables

Trade and other receivables are categorised as follows in accordance with IFRS 9: Financial Instruments:

At amortised cost 19,083,093 42,988,729 19,083,093 42,988,729 Non-ﬁnancial instruments 6,956,377 4,101,973 6,951,816 4,097,411

26,039,470 47,090,702 26,034,909 47,086,140

Ageing of trade receivables

The ageing of trade and other receivables is as follows:

Not past due 3,287,579 5,957,324 3,287,579 5,957,324 Past due 30 - 90 days 178,678 1,656,886 178,678 1,656,886 120+ days 20,555,347 27,764,412 20,555,347 27,764,412 Allowance for credit losses (11,599,451) (9,017,302) (11,599,451) (9,017,302)

12,422,153 26,361,320 12,422,153 26,361,320

Exposure to credit risk

Trade receivables inherently expose the group to credit risk, being the risk that the group will incur ﬁnancial loss if customers fail to make payments as they fall due.

There have been no signiﬁcant changes in the credit risk management policies and processes since the prior reporting period.

A loss allowance is recognised for all trade receivables, in accordance with IFRS 9 Financial Instruments, and is monitored at the end of each reporting period. In addition to the loss allowance, trade receivables are written off when there is no reasonable expectation of recovery, for example, when a debtor has been placed under liquidation. Trade receivables which have been written off are not subject to enforcement activities.

The Group measures the loss allowance for trade receivables by applying the simpliﬁed approach which is prescribed by IFRS 9. In accordance with this approach, the loss allowance on trade receivables is determined as the lifetime expected credit losses on trade receivables. These lifetime expected credit losses are estimated using a provision matrix, which is presented below. The provision matrix has been developed by making use of past default experience of debtors but also incorporates forward looking information and general economic conditions of the industry as at the reporting date.

The estimation techniques explained have been applied for the first time in the current financial period, as a result of the adoption of IFRS 9. Trade receivables were previously impaired only when there was objective evidence that the asset was impaired. The impairment was calculated as the difference between the carrying amount and the present value of the expected future cash flows.

There has been no change in the estimation techniques or signiﬁcant assumptions made during the current reporting period. 2019 – 2020 Annual Financial Report 49 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

14. Trade and other receivables (continued)

Exposure to credit risk (continued)

The Group's historical credit loss experience does not show signiﬁcantly different loss patterns for different customer segments. The provision for credit losses is therefore based on past due status without disaggregating into further risk proﬁles. The loss allowance provision is determined as follows:

Group 2020 2020 2019 2019 Estimated gross Loss Allowance Estimated gross Loss Allowance carrying amount (Lifetime expected carrying amount (Lifetime expected Expected credit loss rate: at default credit loss) at default credit loss)

Not past due: 0.30% (2019: 0.23%) 3,287,579 (14,117) 5,957,324 (13,954) 30 - 90 days past due: 178,678 (47,197) 1,656,886 (46,218) 0.11% (2019: 2.80%) 120 + days past due: 20,555,347 (11,538,137) 27,764,412 (8,957,130) 49.44% (2019: 32.30%) Total 24,021,604 (11,599,451) 35,378,622 (9,017,302)

Association 2020 2020 2019 2019 Estimated gross Loss Allowance Estimated gross Loss Allowance carrying amount (Lifetime expected carrying amount (Lifetime expected Expected credit loss rate: at default credit loss) at default credit loss)

Group Association Figures in Rand 2019 2018 2019 2018

Reconciliation of loss allowances The following table shows the movement in the loss allowance (lifetime expected credit losses) for lease receivables:

Opening balance (9,017,302) (4,302,021) (9,017,302) (4,302,021) Net movement in allowance for credit losses (2,582,149) (4,715,281) (2,582,149) (4,715,281)

Closing balance (11,599,451) (9,017,302) (11,599,451) (9,017,302)

15. Cash and cash equivalents

Cash and cash equivalents consist of: Bank balances 17,798,432 12,965,031 17,459,742 12,623,170 Petty cash 5,467 12,983 5,467 12,983

17,803,899 12,978,014 17,465,209 12,636,153

50 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

Group Association Figures in Rand 2020 2019 2020 2019

16. Interest-bearing loans

Instalment sale - Mercedes Benz Financial Services - 69,041 - 69,041 Less: current portion included under current liabilities - (69,041) - (69,041)

- - - -

Delphisure Group Insurance Brokers 9,113,162 - 9,113,162 -

Non-current liabilities 5,638,231 - 5,638,231 - Current liabilities 3,474,931 69,041 3,474,931 69,041

9,113,162 69,041 9,113,162 69,041

The instalment sale Mercedes Benz Financial Services liability was secured over motor vehicles with a carrying value of R211,456 (2019: R198,007). The borrowings were fully paid up during the year.

The Delphisure Group Insurance Brokers loan is repayable unsecured and bears interest from time to time at 11% per annum, on the reducing capital balance outstanding. The loan is repayable over a period of 48 months. Repayments per month amount to R216,980.

17. Provisions

Reconciliation of provisions - Group - 2020

Opening Additions Utilised during Total balance the year Referees 2,000,000 - - 2,000,000 Leave pay 3,806,154 84,826 - 3,890,980 Honoraria 5,090,461 9 - 5,090,470 National Teams 25,786,045 - (16,436,965) 9,349,080 Audit fees 1,155,000 - - 1,155,000

37,837,660 84,835 (16,436,965) 21,485,530

Reconciliation of provisions - Group - 2019

Opening Additions Utilised during Total balance the year Referees 2,168,422 - (168,422) 2,000,000 Leave pay 3,897,915 - (91,761) 3,806,154 Honoraria 5,584,168 - (493,707) 5,090,461 National Teams 7,198,313 18,587,732 - 25,786,045 Audit fees 1,000,000 155,000 - 1,155,000

19,848,818 18,742,732 (753,890) 37,837,660

2019 – 2020 Annual Financial Report 51 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

Group Association Figures in Rand 2020 2019 2020 2019

17. Provisions (continued)

Reconciliation of provisions - Association - 2020

37,837,660 84,835 (16,436,965) 21,485,530

Reconciliation of provisions - Association - 2019

19,848,818 18,742,732 (753,890) 37,837,660

Referees

Provisions for referees are based on estimated fees that will be paid to referees who meet the compliance requirements.

Leave pay

Provisions for leave are based on each employee's outstanding leave days.

Honararia

Provision for the Honoraria is based on the last amount that was approved and paid to NEC members. The actual amount to be paid will be determined by SAFA members at the next Congress.

National Teams

National Teams provisions for events are based on approved budgets, in cases where actual costs have not been received.

52 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

Group Association Figures in Rand 2020 2019 2020 2019

18. Income received in advance

FIFA 5,431,880 1,011,214 5,431,880 1,011,214 PSL 833,333 833,335 833,333 833,335 The 2010 FIFA World Cup Legacy Trust 14,876,007 25,633,703 14,876,007 25,633,703 Motsepe Foundation 5,554,170 554,169 5,554,170 554,169 Afrisam 998,633 2,697,498 998,633 2,697,498 Aspen Pharmacare 700,000 - 700,000 - SABC 12,782,827 - 12,782,827- Tiger Brands 1,000,000 - 1,000,000 - Department of Sports, Arts and Culture 2,847,811 - 2,847,811 -

45,024,661 30,729,919 45,024,661 30,729,919

19. Trade and other payables

Financial instruments: Trade payables 39,593,209 73,753,725 38,268,887 72,437,403 Salary payables 959,556 9,947,163 959,556 9,947,163 Accruals 25,246,064 67,437,951 25,246,064 67,437,951 Sundry payables 3,835,580 11,501,077 3,835,580 11,501,077

69,634,409 162,639,916 68,310,087 161,323,594

20. Cash generated from operations

Proﬁt/(loss) before taxation 54,373,552 (75,872,718) 54,384,724 (74,175,773) Adjustments for: Depreciation and amortisation 10,119,636 9,356,556 10,119,636 8,656,673 Gains on disposals of property, plant 103,987 (69,888) 103,987 (69,888) and equipment Finance income (570,029) (483,392) (561,523) (458,477) Finance costs 4,641,957 3,482,311 4,641,957 3,479,244 Decrease (increase) in fair value of - 5,302,296 - 5,302,296 derivative ﬁnancial asset Movements in provisions (16,352,130) 37,837,660 (16,352,130) 37,837,660 Movements in loan receivable - - - (6,298,943) Other items (1,250) - (1,249) - Prior period error 8,970,102 - 8,970,102 - Changes in working capital: Decrease in trade and other receivables 21,051,232 2,894,451 21,051,231 7,197,496 (Decrease)/increase in trade and (84,620,064) 9,285,636 (84,628,065) 10,432,964 other payables Increase in income received in advance 14,294,742 10,032,964 14,294,742 10,032,964

12,011,735 1,765,876 12,023,412 1,936,216

2019 – 2020 Annual Financial Report 53 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

Group Association Figures in Rand 2020 2019 2020 2019

21. Related parties

Related party balances

Loan accounts - Owing by related parties NEC members in respect of motor vehicles 4,042,777 4,180,672 4,042,777 4,180,672

Related party transactions

NEC Honoraria 2,400,388 2,831,817 2,400,388 2,831,817 Allowances 1,226,359 933,856 1,226,359 933,856

Key management personnel Remuneration 7,680,197 9,335,407 7,680,197 9,335,407

Grants received The 2010 FIFA World Cup Legacy Trust 42,063,171 42,548,071 42,063,171 42,548,071

22. Contingencies

Mr Leslie Sedibe, former CEO of SAFA, is suing the Association for defamation of character after he was banned by FIFA following the 2010 match ﬁxing scandal. He is claiming damages for a total amount of R5m. The matter had been set down for 22 February 2019 in the Johannesburg High Court. However, the matter was later postponed and the Association is now waiting for a new court date.

The Association is a defendent in various cases related to unfair dismissal charges. The cases have not yet been ﬁnalised yet, however based on legal advise received, the NEC is of the opinion that the outcome of these proceedings will have no effect on the Association's ﬁnancial statements.

In 2014, the SAFA Congress decided that School's football will now be organised and run by the Association instead of the South African Schools' Football Assocation (SASFA). SASFA approached the Johanessburg High Court in a bid to have this Congress decision overturned. The Johanessburg High Court ruled that this matter should be heard by an arbitrator, whom should be agreed by both parties. On 11 March 2019, the arbitrator (N.H. Maenetjie SC), ruled in the Association's favour. SASFA has since taken the Arbitration award on review and we are waiting for the review date.

23. Prior period errors

During the current year, the Group discovered that income relating to the 2019 year had been erroneously omitted in its ﬁnancial statements. As a consequence, other income and related assets have been understated. The errors have been corrected by restating each of the affected ﬁnancial statement line items for prior period and accounting for the income in the correct year.

During the current year, the Group discovered that provisions for expenditure relating to the 2019 year had been erroneously over provided in its ﬁnancial statements. As a consequence, operating expenses and the related liabilities have been overstated. The errors have been corrected by restating each of the affected ﬁnancial statement line items for prior period.

54 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

Group Association Figures in Rand 2020 2019 2020 2019

23. Prior period errors (continued)

The correction of the errors results in adjustments as follows:

Statement of Financial Position Retained earnings 8,970,102 - 8,970,102 -

Proﬁt or Loss Other income 1,257,617 - 1,257,617 - Operating expenses 7,712,485 - 7,712,485 -

24. Comparative ﬁgures

Certain comparative figures have been reclassified for consistency with current year presentation. The reclassification is based on the nature of certain accounts and provides a more accurate reflection.

The effect of the reclassifications are confined to the same classes of asset and liability and has no effect on the previously reported financial position and cash flows of the Group and Association: • non-current assets ((reclassification between asset categories within property, plant and equipment) • current liabilities (reclassification between trade payables, accruals and provisions)

25. Financial instruments and risk management

Categories of ﬁnancial instruments

Categories of ﬁnancial assets

Group - 2020 Notes Amortised cost Total Trade and other receivables 14 19,083,093 19,083,093 Cash and cash equivalents 15 17,803,899 17,803,899

36,886,992 36,886,992

Group - 2019 Amortised cost Total Trade and other receivables 14 42,988,729 42,988,729 Cash and cash equivalents 15 12,978,014 12,978,014

55,966,743 55,966,743

Association - 2020 Amortised cost Total Trade and other receivables 14 19,083,093 19,083,093 Cash and cash equivalents 15 17,465,209 17,465,209

36,548,302 36,548,302

Association - 2019 Amortised cost Total Trade and other receivables 14 42,988,729 42,988,729 Cash and cash equivalents 15 12,636,153 12,636,153

55,624,882 55,624,882

2019 – 2020 Annual Financial Report 55 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

25. Financial instruments and risk management (continued)

Categories of ﬁnancial liabilities

Group - 2020 Notes Amortised cost Total

Trade and other payables 19 69,634,415 69,634,415 Interest bearing loans 16 9,113,162 9,113,162

78,747,577 78,747,577

Group - 2019 Amortised cost Leases Total

Trade and other payables 19 162,639,919 - 162,639,919 Interest bearing loans 16 - 69,041 69,041

162,639,919 69,041 162,708,960

Association - 2020 Amortised cost Total

Trade and other payables 19 68,310,088 68,310,088 Interest bearing loans 16 9,113,162 9,113,162

77,423,250 77,423,250

Association - 2019 Amortised cost Leases Total

Trade and other payables 19 161,323,593 - 161,323,593 Interest bearing loans 16 - 69,041 69,041

161,323,593 69,041 161,392,634

Financial risk management

Overview

The group is exposed to the following risks from its use of ﬁnancial instruments:

• Credit risk; • Liquidity risk

This note presents information about the Group's exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group's management of capital. Further quantitative disclosures are included throughout these ﬁnancial statements.

56 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

25. Financial instruments and risk management (continued)

Financial risk management (continued)

Credit risk

Credit risk is the risk of ﬁnancial loss to the group if a customer or counterparty to a ﬁnancial instrument fails to meet its contractual obligations.

Credit risk for exposures other than those arising on cash and cash equivalents, are managed by making use of credit approvals, limits and monitoring. The Group only deals with reputable counterparties with consistent payment histories. Counterparty credit limits are in place and are reviewed and approved by credit management committees. The exposure to credit risk and the creditworthiness of counterparties is continuously monitored.

Credit risk exposure arising on cash and cash equivalents is managed by the group through dealing with well-established ﬁnancial institutions with high credit ratings.

In order to calculate credit loss allowances, management determine whether the loss allowances should be calculated on a 12 month or on a lifetime expected credit loss basis. This determination depends on whether there has been a significant increase in the credit risk since initial recognition. If there has been a significant increase in credit risk, then the loss allowance is calculated based on lifetime expected credit losses. If not, then the loss allowance is based on 12 month expected credit losses. This determination is made at the end of each financial period. Thus the basis of the loss allowance for a specific financial asset could change year on year.

Management apply the principle that if a financial asset's credit risk is low at year end, then, by implication, the credit risk has not increased significantly since initial recognition. In all such cases, the loss allowance is based on 12 month expected credit losses. Credit risk is assessed as low if there is a low risk of default (where default is defined as occurring when amounts are 90 days past due). When determining the risk of default, management consider information such as payment history to date, industry in which the customer is employed, period for which the customer has been employed, external credit references etc. In any event, if amounts are 30 days past due, then the credit risk is assumed to have increased significantly since initial recognition. Credit risk is not assessed to be low simply because of the value of collateral associated with a financial instrument. If the instrument would not have a low credit risk in the absence of collateral, then the credit risk is not considered low when taking the collateral into account. Trade receivable and contract assets which do not contain a significant financing component are the exceptions and are discussed below.

For trade receivables and contract assets which do not contain a significant financing component, the loss allowance is determined as the lifetime expected credit losses of the instruments. For all other trade receivables, contract assets and lease receivables, IFRS 9 permits the determination of the credit loss allowance by either determining whether there was a significant increase in credit risk since initial recognition or by always making use of lifetime expected credit losses. Management have chosen as an accounting policy, to make use of lifetime expected credit losses. Management does therefore not make the annual assessment of whether the credit risk has increased significantly since initial recognition for trade receivables, contract assets or lease receivables.

Funding is obtained from The 2010 FIFA World Cup Legacy Trust, CAF, FIFA and other sponsorships. Formal agreements are entered into which set out the terms and conditions of the funding.

The majority of the Group’s sponsors and donors have been transacting with the Group since inception and there have been no major losses on trade receivables.

2019 – 2020 Annual Financial Report 57 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

25. Financial instruments and risk management (continued)

The maximum exposure to credit risk is presented in the table below:

Group Notes 2020 2019

Gross Credit loss Amortised Gross Credit loss Amortised carrying allowance cost / fair carrying allowance cost / fair amount value amount value

Trade and other receivables 14 30,682,544 (11,599,451) 19,083,093 52,006,031 (9,017,302) 42,988,729 Cash and cash equivalents 15 17,803,899 - 17,803,899 12,978,014 - 12,978,014

48,486,443 (11,599,451) 36,886,992 64,984,045 (9,017,302) 55,966,743

Association 2020 2019

Gross Credit loss Amortised Gross Credit loss Amortised carrying allowance cost / fair carrying allowance cost / fair amount value amount value

Trade and other receivables 14 30,682,544 (11,599,451) 19,083,093 52,006,031 (9,017,302) 42,988,729 Cash and cash equivalents 15 17,465,209 - 17,465,209 12,636,153 - 12,636,153

48,147,753 (11,599,451) 36,548,302 64,642,184 (9,017,302) 55,624,882

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its ﬁnancial and other obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufﬁcient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Association's reputation.

In the case of cash flow difficulties, the Group’s creditors are notified of the situation and remedial action put in place. The Group however ensures that it has sufficient current assets which will realise in future to meet financial obligations. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted.

Group - 2020 Notes Less than 2 to 5 Total 1 year years Non-current liabilities Interest bearing borrowings 16 - 5,638,231 5,638,231

Current liabilities Trade and other payables 19 82,730,762 8,384,182 91,114,944 Interest bearing borrowings 16 3,474,931 - 3,474,931

(86,205,693) (14,022,413) (100,228,106)

Group - 2019

Current liabilities Trade and other payables 18 200,477,579 - 200,477,579 Interest bearing borrowings 16 69,041 - 69,041

(200,546,620) - (200,546,620)

58 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

25. Financial instruments and risk management (continued)

Association - 2020 Notes Less than 2 to 5 Total 1 year years

Non-current liabilities Interest bearing borrowings 16 - 5,638,231 5,638,231

Current liabilities Trade and other payables 16 81,406,435 8,384,182 89,790,617 Interest bearing borrowings 16 3,474,931 - 3,474,931

(84,881,366) (14,022,413) (98,903,779)

Association - 2019

Current liabilities Trade and other payables 19 199,161,253 - 199,161,253 Finance lease liabilities 16 69,041 - 69,041

(199,230,294) - (199,230,294)

26. Going concern

The Group and Association made net proﬁts of R54.4 million (2019: R75.9 million net loss) and R54.4 million (2019: R74.2 million net loss) respectively during the year ended 30 June 2020 and, as of that date, the Group's liabilities exceed assets by R0.2 million (2019: R63.5 million liabilities exceeded assets) and Association's assets exceed liabilities by R0.8 million (2019: R62.6 million liabilities exceeded assets) respectively. The Group continues to pursue its plans of improving this position and is still determined to achieve a net current asset position within the next few years. It is quite important for this position to be achieved because it would result in the debts being settled quicker. The Group has, therefore, set to intensify its ﬁnancial recovery plans which should improve its net current asset position.

The Group has long-term sponsorship contracts with most of its sponsors and this assures it of future revenue inflows. These sponsorships are expected to continue in view of the long-term nature and the mutual relationships that are long standing. The Group is also guaranteed of grant funding from FIFA and CAF. The Group also continues to exploit a number of revenue opportunities that it identified previously. This is being combined with the implementation of its financial recovery plan which has started to achieve a fair amount of success.

In October 2019 the Association concluded a broadcast a new broadcast deal with the South African Broadcasting Corporation (“SABC”). Even though the new deal is significantly less than the previous one that terminated in April 2018, the opportunity to broadcast our activities presents a platform for the Association to attract new sponsors. The Association is also working closely with the SABC in jointly realising maximum commercial benefits from the current contract. These include the value-in-kind benefits which are contained in the contract. The Association is now focusing and intensifying its efforts in acquiring a satellite broadcast partner. The Association is also exploring the myriad of opportunities presented by the Fourth Industrial Revolution era. These include the exploitation of streaming opportunities and use of other disruptive technologies.

The Association continue to negotiate with a number of potential sponsors for the sale of rights for a number of our properties. These properties include junior national teams, coaching education and leagues. The Association is making some steady progress in that regard despite the current tough South African economic conditions. 2019 – 2020 Annual Financial Report 59 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

26. Going concern (continued)

The Association is now at advanced stages of constructing a merchandise shop at SAFA House. This project is funded through the FIFA Forward programme. The shop is expected to contribute additional and unencumbered revenue to the Association and this will be achieved through the selling of a wide range of our merchandise within the shop and through online sales.

Our Ima Nathi sponsorship programme has not achieved its planned success. However, the Association continues to put effort into it because its success will give our Local Football Associations (“LFA”) a huge financial boost and make our Regions less reliant on the national office for funding. Currently 3 (three) LFAs are beneficiaries of this programme and work is currently under way to bring more LFAs on board.

The FIFA Forward programme is still in place and the Association will continue to beneﬁt from it as a FIFA Member Association. The current funding cycle which was approved by the FIFA Council runs from 2019 to 2022. The Association, therefore, is guaranteed this funding for, at least, the next 2 years and FIFA has indicated that the funding will continue in future years. The total funding for Operational Costs and Projects is USD 6 million for the 4 years. These funds go a long way in covering the Association’s normal operational costs and some projects costs as well. In addition, FIFA recently introduced funding for women’s football. The ﬁrst allocation, which was USD 500,000.00, was paid to all Members Associations around September 2020. This funding from FIFA for women’s football will go a long way in assisting the Association.

The National Lotteries Commission (“NLC”) also continues to make funds available for some of our activities. The previous few years funding from the NLC has been more focused towards the Women football activities. This approach is most welcome as we endeavour to achieve gender parity as enshrined in our Vision 2022 strategy document.

SETA / CATHSETA funding – The Association pays towards the Skills Development Levy on a regular basis. It contributes both on the permanent and non-permanent payroll. Previously we have only received training funds from CATHSETA for permanent staff training. We are in negotiations with CATHSETA for funding of some our training programmes like Referees’ courses, Coaching courses and Administration Capacity building courses.

The Government has a number of initiatives that are aimed at encouraging social cohesion and healthy lifestyles and funding is provided towards these. Football plays such a signiﬁcant role in assisting the Government in its efforts. We will, therefore, work closely with Government so that they can fund our existing football development programmes, especially at grassroots level.

60 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

26. Going concern (continued)

During the run-up to the 2010 FIFA World Cup™, FIFA launched a programme named “Win in Africa with Africa” to support the development of the game on the African continent. The South African Government committed USD 10 million for the African Diaspora legacy programme, specifically for the Caribbean countries. FIFA agreed to administer the fund through the FIFA account. As part of its African Renaissance philosophy, the South African Government reached out to the African Diaspora to incorporate them in the programme for them to benefit from the first FIFA World Cup on African soil. FIFA transferred the funds, USD 10 million, to the Caribbean countries, on behalf of the South African Government. FIFA then deducted these funds from SAFA’s share of the ticketing revenue. SAFA continues negotiations with the South African Government for the reimbursement of this amount to SAFA.

We continue to have access to various grants which go toward our development programmes. The 2010 FIFA World Cup Legacy Trust (“the Trust”) continues to support our development activities. We have successfully applied for regular funding for our development programmes from the Trust since 2013 and we expect this funding to continue for the next few years. This means that the SAFA’s development programmes will continue unhampered. Therefore, management’s efforts can be channelled towards generating funds for other programmes and improving the current assets position of the Group.

The development and populating of the MYSAFA.net is progressing quite well. Whilst this system is of significant value to the effective registration of players and as a competition management system, the Association is also in the process of monetising it. The commercial opportunities associated with MYSAFA.net are as follows: • Telco partnership that will benefit both SAFA and its members (Regions) • Advertising served on both the Registration and Competition systems, as well as associated applications ("apps") • Big data marketing, that is partnering with an agency to direct market to our members • Presenting sponsors for apps, competition website, talent identification • Membership registration fees

The Association expect to realise the potential revenue from this stream within the next 2 years.

The Group continues to vigorously manage its costs by being innovative in ways that it carries out its activities. Fiscal discipline is being practised across the full organisation’s spectrum. This is strengthened by, among other tools, operating with an approved budget, enforcement of procurement policies and regular ﬁnancial reporting. The Group continues to create value within the supply chain by working closely with its suppliers. The Association has also embarked on a Section 189 process which will result in some employees being retrenched. A new organogram and salary bands were approved by the NEC on 19 September 2020. 17 (seventeen) employees have already been terminated after accepting voluntary separation packages. This process is expected to result in a salaries cost savings of R20 million per year. 2019 – 2020 Annual Financial Report 61 Annual Financial Statements

South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Notes to the Group Financial Statements And Association Financial Statements

26. Going concern (continued)

The Group continues to restructure some of its debts by negotiating favourable repayment periods. This is made possible through the healthy partnerships that it has with its service providers and relationships that were developed over a number of years.

FIFA has made available interest free loans to all its Member Associations. The Association is considering accessing this interest free loan for the purpose of settling most of its debts. FIFA’s loan repayment terms are very generous; therefore, this will greatly improve the Association’s liquidity. Currently, a huge amount of cashﬂows are allocated towards partially settling some long outstanding debts every month. So the consolidation of debts into a singular FIFA loan / debt will greatly improve our current and liquidity ratios.

The National Executive Committee (“NEC”) believes that the Group will achieve its targets which are contained in its Financial Recovery Plan. Despite the prevailing tough economic conditions, the NEC firmly believes that the Group will leverage on the popularity of the sport, football being the most popular sport in the World, to achieve its plans. The NEC is also satisfied that the Group is able to meet its working capital requirements through the normal cyclical nature of its receipts. Further, the NEC continues to intensify its efforts in monitoring the Group’s expenditure levels with a view of minimising costs through greater efficiencies. The NEC also continues to focus on maintaining an appropriate level of overheads in line with the Group’s available cash resources.

The Association, as the football controlling body in the country, is a national asset. It is due to this status that it works very closely with the Government and enjoys its support.

The NEC is, therefore, conﬁdent that the Group is a going concern.

27. Events after the reporting period

In terms of IAS 10 Events after the reporting period, non-adjusting post balance sheet events are events after the reporting period that are indicative of a condition that arose after the reporting period ended 30 June 2020.

Impact of COVID-19

A National State of Disaster was declared in South Africa on 15 March 2020, followed by a nationwide lockdown taking effect from 26 March 2020. The lockdown was initially set at a duration of 21 days in South Africa, and subsequently extended indeﬁnitely under risk-adjusted levels of economic restrictions.

The NEC are not aware of any other events after the reporting period that will have an impact on ﬁnancial position, performance or cash ﬂows of the Group.

62 South African Football Association South African Football Association Group Financial Statements And Association Financial Statements for the year ended 30 June 2020

Detailed Income Statement

Group Association Figures in Rand Notes 2020 2019 2020 2019

Revenue

Ticketing revenue 349,292 342,391 349,292 342,391 Grants received 61,073,240 38,822,716 61,073,240 38,822,716 Rental income 391,956 133,523 391,956 133,523 Host cities' income 4,152,626 3,148,368 4,152,626 3,148,368 National Technical Centre - day visitors 4,234,937 5,893,277 4,234,937 5,893,277 and use of facilities Sponsorship income 170,502,493 189,035,618 170,502,493 185,166,961

4 240,704,544 237,375,893 240,704,544 233,507,236

Other income 8 815,243 8,115,617 815,243 8,115,617 Other operating gains (losses) (Impairment losses) / reversal of impairment losses 5 (5,801,274) (4,715,281) (5,801,274) (4,715,281)

Other operating expenses Depreciation (10,119,636) (9,356,556) (10,119,636) (8,656,673) Competition and leagues costs (25,998,175) (31,433,755) (25,998,175) (31,433,755) Governance costs (10,552,327) (7,485,137) (10,552,327) (7,485,137) National Technical Centre (2,955,923) (4,537,042) (2,955,923) (4,537,042) Other administration costs (72,534,543) (114,180,470) (72,514,865) (109,292,903) National team costs (57,080,675) (119,480,758) (57,080,675) (119,480,758) Football development costs 2,072,233 (21,943,902) 2,072,233 (21,943,902)

(177,169,046) (308,417,620) (177,149,368) (302,830,170)

Operating proﬁt/(loss) 5 58,549,467 (67,641,391) 58,569,145 (65,922,598) Finance income 6 570,029 483,392 561,523 458,477 Finance costs 7 (4,641,957) (3,482,311) (4,641,957) (3,479,244)

Other non-operating gains (losses) (Loss)/proﬁt on sale of non-current assets (103,987) 69,888 (103,987) 69,888 Decrease in fair value of ﬁnancial asset - (5,302,296) - (5,302,296)

Proﬁt/(loss) for the year 54,373,552 (75,872,718) 54,384,724 (74,175,773)

2019 – 2020 Annual Financial Report 63 SAFA SPONSORS, PARTNERS AND SUPPLIERS

National Teams’ Sponsors

Banyana Banyana Bafana Bafana Amajita

League Sponsors

Technical Broadcast Referees’ Digital Partner Partner Partner Partner

Suppliers

Development Partners

2010 FIFA WORLD CUP LEGACY TRUST

Corporate Social Investment Partners

Mandela LEGACY